Unit Investment Trusts

An SEC registered investment company which purchases a fixed, unmanaged portfolio of income-producing securities and then sells shares in the trust to investors. The major difference between a Unit Investment Trust and a mutual fund is that a mutual fund is actively managed, while a Unit Investment Trust is not managed at all. Capital gains, interest, and dividend payments from the trust are passed on to shareholders at regular periods. If the trust is one that invests only in tax-free securities, then the income from the trust is also tax-free. Unit Investment Trusts typically hold the investment for a fixed period of time, such as one year, the the securities are liquidated and the investor receives their share of the proceeds.